First Assignment _ Decision Analysis PDF

**What decision would an optimist make?** E\) Alternatives 1 or 2 **Based on the following payoff table,** ------------------ ---------------------- ----- ----- **States of Nature** **Alternatives** A B C Alternative 1 300...

**What decision would an optimist make?** E\) Alternatives 1 or 2 **Based on the following payoff table,** ------------------ ---------------------- ----- ----- **States of Nature** **Alternatives** A B C Alternative 1 300 200 100 Alternative 2 280 300 280 Alternative 3 240 350 240 Do Nothing 0 0 0 ------------------ ---------------------- ----- ----- 2. **Using the regret criterion, which alternative would be chosen?** 2. 3)An investor is considering some investment alternatives that may occur under two states of nature as shown in the payoff table below: ------------------ ---------------------- -------------------- **States of Nature** **Alternatives** Favorable market Unfavorable market Alternative 1 60,000 5,000 Alternative 2 100,000 -30,000 Do nothing 0 0 **Probability** 0.4 0.6 ------------------ ---------------------- -------------------- He is considering conducting a study to acquire more information on the success of his investment. Such a study will cost him 5,000 JD and he was informed by the market experts that there is a 60% chance that the study will yield negative results. The market experts informed the investor that if he conducts the study, the expected probability of unfavorable market given positive results is 45%, and the expected probability of a favorable market given negative results is 35%. **4) If the investor selected to conduct the study, and study results were positive, the maximum expected monetary value will be:** \(A) 30,250 \(B) 24,750 \(C) 33,000 \(D) 36,500 \(E) 24,750 1. 3)An investor is considering some investment alternatives that may occur under two states of nature as shown in the payoff table below: ------------------ ---------------------- -------------------- **States of Nature** **Alternatives** Favorable market Unfavorable market Alternative 1 60,000 5,000 Alternative 2 100,000 -30,000 Do nothing 0 0 **Probability** 0.4 0.6 ------------------ ---------------------- -------------------- He is considering conducting a study to acquire more information on the success of his investment. Such a study will cost him 5,000 JD and he was informed by the market experts that there is a 60% chance that the study will yield negative results. The market experts informed the investor that if he conducts the study, the expected probability of unfavorable market given positive results is 45%, and the expected probability of a favorable market given negative results is 35%. **5) If the investor selected to conduct the study, and study results were negative, the maximum expected monetary value will be:** \(A) 35,750 \(B) 19,250 \(C) 21,000 \(D) 10,500 \(E) 24,750 )An investor is considering some investment alternatives that may occur under two states of nature as shown in the payoff table below: ------------------ ---------------------- -------------------- **States of Nature** **Alternatives** Favorable market Unfavorable market Alternative 1 60,000 5,000 Alternative 2 100,000 -30,000 Do nothing 0 0 **Probability** 0.4 0.6 ------------------ ---------------------- -------------------- He is considering conducting a study to acquire more information on the success of his investment. Such a study will cost him 5,000 JD and he was informed by the market experts that there is a 60% chance that the study will yield negative results. The market experts informed the investor that if he conducts the study, the expected probability of unfavorable market given positive results is 45%, and the expected probability of a favorable market given negative results is 35%. **5) If the investor selected not to conduct the study, the maximum expected monetary value will be:** \(A) 24,000 \(B) 36,000 \(C) 22,000 \(D) 33,000 \(E) 27,000 **Based on the payoff table below,** ------------------- ---------------------- ---------- ---------- **States of Nature** **Alternatives** A B C Alternative 1 600 400 -100 Alternative 2 500 410 -50 Alternative 3 550 420 -150 **probabilities** **0.40** **0.30** **0.30** ------------------- ---------------------- ---------- ---------- **8) Expected value of perfect information (EVPI) will be:** **Based on the payoff table below,** ------------------- ---------------------- ---------- ---------- **States of Nature** **Alternatives** A B C Alternative 1 600 400 -100 Alternative 2 500 410 -50 Alternative 3 550 420 -150 **probabilities** **0.40** **0.30** **0.30** ------------------- ---------------------- ---------- ---------- **9) Minimum expected opportunity loss value will be:** **Based on the payoff table below,** ------------------ ---------------------- -------------- **States of Nature** **Alternatives** Good economy Poor economy Alternative 1 150,000 -60,000 Alternative 2 80,000 -10,000 Do nothing 0 0 **Probability** p ------------------ ---------------------- -------------- **10) Using sensitivity analysis, the range of P values for alternative 1 will be:** **Based on the payoff table below,** ------------------ ---------------------- -------------- **States of Nature** **Alternatives** Good economy Poor economy Alternative 1 150,000 -60,000 Alternative 2 80,000 -10,000 Do nothing 0 0 **Probability** p ------------------ ---------------------- -------------- **11) Using sensitivity analysis, the range of P values for alternative 2 will be:** **Based on the payoff table below,** ------------------ ---------------------- -------------- **States of Nature** **Alternatives** Good economy Poor economy Alternative 1 150,000 -60,000 Alternative 2 80,000 -10,000 Do nothing 0 0 **Probability** p ------------------ ---------------------- -------------- **12) Using sensitivity analysis, the range of P values for alternative doing nothing will be:** **Question 1:** A company is considering three marketing strategies: A, B, and C. The potential profits (in thousands of dollars) for each strategy under different market conditions are shown below: **Market Condition** **Strategy A** **Strategy B** **Strategy C** ---------------------- ---------------- ---------------- ---------------- Strong 250 180 120 Moderate 200 220 180 Weak 150 250 150 Which strategy should the company choose if they want to maximize their potential profit? A\) Strategy A B) Strategy B C) Strategy C D) It depends on the market condition. **Question 2:** A farmer is deciding between three crops: wheat, corn, and soybeans. The potential yield (in bushels per acre) for each crop under different weather conditions is shown below: **Weather Condition** **Wheat** **Corn** **Soybeans** ----------------------- ----------- ---------- -------------- Dry 20 15 10 Wet 30 25 20 Export to Sheets Using the minimax regret criterion, which crop should the farmer choose? A\) Wheat B) Corn C) Soybeans D) It depends on the weather condition. **Question 3 and 4:** A tech startup is considering launching a new product. The potential profit (in millions of dollars) under different market scenarios is shown below: **Market Scenario** **Launch Product** **Don\'t Launch** --------------------- -------------------- ------------------- High Demand 10 0 Low Demand -2 0 Export to Sheets The company can conduct a market research study to gain more information about the potential demand. This study costs \$1 million. If the study results are positive, the probability of high demand increases to 70%. If the study results are negative, the probability of high demand decreases to 30%. **Question 3:** If the company conducts the study and the results are positive, what is the expected monetary value of launching the product? A\) \$6.1 million B) \$7.2 million C) \$8.3 million D) \$9.4 million **Question 4:** If the company conducts the study and the results are negative, what is the expected monetary value of launching the product? A\) -\$0.8 million B) -\$1.2 million C) -\$1.6 million D) -\$2.0 million **Question 5:** Referring to the previous scenario, if the company decides not to conduct the study, what is the expected monetary value of launching the product? A\) \$2.8 million B) \$3.2 million C) \$3.6 million D) \$4.0 million **Question 6 and 7:** A manufacturing company is considering three production processes: A, B, and C. The cost per unit (in dollars) for each process under different demand levels is shown below: **Demand Level** **Process A** **Process B** **Process C** ------------------ --------------- --------------- --------------- High 10 12 15 Medium 15 10 12 Low 20 15 10 Export to Sheets The probability of high, medium, and low demand is 0.3, 0.4, and 0.3, respectively. **Question 6:** What is the expected value of perfect information (EVPI)? A\) \$1.20 B) \$1.50 C) \$1.80 D) \$2.10 **Question 7:** What is the minimum expected opportunity loss (EOL)? A\) \$1.20 B) \$1.50 C) \$1.80 D) \$2.10 **Question 8, 9, and 10:** A retailer is considering two inventory policies: A and B. The profit per unit (in dollars) under different demand levels is shown below: **Demand Level** **Policy A** **Policy B** ------------------ -------------- -------------- High 20 15 Low 5 10 Export to Sheets **Upload an image** This prompt requires an image that you need to add. Tap the image button to upload an image. 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